Card readers that can read smart cards are called smart card
readers. Card readers that can read memory chips are called memory card readers.

They are commonly used for identification to control financial transactions or
door locks.

USB devices
automatically find and install device drivers. The difficult part is finding
documentation on how to interface with the driver.

Card readers are often integrated into keyboards. This saves space and
USB
connections.

USB Flash Drive vs Smart Card

In theory, there need be no sharp dividing line between a USB Flash drive and Smart Card but in practice they each serve a different niche.

Differences between USB Flash drives and Smart Cards

Differences between USB Flash drives and Smart Cards

Feature

Flash drive

Smart Card

Purpose

transporting data

ID and electronic commerce.

Capacity

32 or 64 gigabytes of RAM

Only 300 bytes to 32K bytes.

Software

Requires no software other than the driver automatically installed when you insert the flash drive into the USB port.

Requires a driver for the reader and application software to control login, the lock, access to files etc.

CPU

has no CPU or a CPU that does nothing but guard the contents of the drive with a PIN and possibly encrypt/decrypt data transparently.

has a CPU that can digitally sign, verify, encrypt and decrypt messages. It may be custom programmed at manufacturing time.

private keys

can store the private key of a digital certificate, but it is just ordinary data. The owner of the drive can look at it or change it.

has private keys for digital certificates burned into the hardware in a way that is completely inaccessible or modifiable by the owner. He can digitally sign, verify, encrypt and decrypt
messages with those keys however.